NCUA's extended examination cycle could begin as soon as next year for some credit unions, the regulator announced today.
Pending approval from the National Credit Union Administration's board of directors, well-managed, low-risk federally chartered credit unions with assets of less than $1 billion could move to an extended examination cycle next year. Credit unions that do not meet those criteria should expect their new exam cycles to begin eight to 12 months from the date of their last examination. Federal credit unions with assets of less than $30 million will continue to receive targeted, defined-scope exams, and examiners will have the discretion to perform similar procedures at CUs of $30 million to $50 million in assets with composite CAMEL codes of 1, 2 or 3.
Those changes are outlined – along with several other recommendations – in a report from the agency's Exam Flexibility Initiative working group and on the Exam Flexibility Initiative webpage.
"NCUA is committed to improving operations, responding to change, and finding ways to meet the needs of the credit unions we regulate while protecting the members whose money we insure," NCUA Board Chairman Rick Metsger said in a statement. "We want to be more efficient and more effective while always putting safety and soundness first. We launched this initiative last May as part of the continual quality improvement program, and the working group has been diligent about gathering information and suggestions from credit union stakeholders throughout the process."
NCUA is expected to discuss the exam schedule at its Nov. 17 board meeting, where it will also address the agency's 2017-2018 budget.
Jim Nussle, president and CEO of the Credit Union National Association, praised NCUA's announcement in a statement, thanking NCUA Chairman Rick Metsger for making exam reform a priority.
"The extended exam cycle will provide most well-run credit unions with some relief," said Nussle, adding "CUNA and credit unions have pushed for an extended examination cycle for a long time and we're very glad to see NCUA moving decisively on this issue."
NCUA's annoucement also received a positive reception from the National Association of Federal Credit Unions, though President and CEO Dan Berger wasn't full-throated in his praise.
“NAFCU believes it’s time for NCUA to fully acknowledge the substantial exam burden experienced by all well-run, healthy credit unions. That is why we have long advocated for all healthy credit unions, not just credit unions less than $1 billion in assets, to be returned to an extended exam cycle,” Berger said in a statement. “The exam flexibility report contains some positive improvements, which we appreciate and should be swiftly adopted by the agency, but NCUA can do more to provide relief and still protect the share insurance fund. We will continue to work with NCUA to ensure credit unions get the best changes possible on this front.”
